The Cabinet approved the re-appointment of MK Eli Ben-Dahan as the Deputy Defense Minister Monday.
The move brings to an end a crisis within the coalition.
Prime Minister Binyamin Netanyahu had initially prevented the reinstatement of MK Ben-Dahan, whose term automatically expired when former Defense Minister Avigdor Liberman submitted his resignation.
The Jewish Home party threatened to vote against the coalition in all votes until Ben-Dahan was reinstated as Deputy Defense Minister.
On Sunday evening, Prime Minister Netanyahu backed down and announced that Ben-Dahan would be reinstated.
Ben-Dahan will serve directly under Netanyahu, who announced that he would assume the post of Defense Minister.